Bankers’ committee back CBN’s N3.5 trillion stimulus for economy

The Bankers’ Committee on Saturday announced its support for the measures enunciated by the Central Bank of Nigeria (CBN) under a N3.5 trillion stimulus package in response to the ravaging impact of the coronavirus pandemic on the Nigerian economy.

The Bankers Committee is an exclusive forum for the chief executives of Nigerian banks and the directors of the different departments of the CBN, with the CBN governor as chairman.

At its meeting on Saturday in Lagos, the committee noted the escalating cases of coronavirus pandemic, with about 22 new cases reported so far in Nigeria.

Already, the Federal Government has ordered the closure of schools and many other public institutions, while large public gatherings have been restricted.

Consequently, the Committee pledged to grant funding facilities (in Naira and foreign exchange) to pharmaceutical companies in the country to enable them procure raw materials and equipment to boost local drug production in Nigeria.

The CBN governor, Godwin Emefiele, who presided over the meeting announced in the communique he read at the end of the meeting that about 11 pharmaceutical companies have been shortlisted as beneficiaries.

They include Emzor Pharmaceuticals, Fidson Healthcare Limited, Glaxo Smithkline Consumer Nigeria PLC, May & Baker Nigeria PLC, Unique Pharma, Swiss Pharma, Neimeth International Pharmaceuticals Plc, Sagar Vitaceuticals Nigeria Limited, Orange Drugs, and Dana Pharma.

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The CBN governor said the Committee took the decision to support the pharmaceutical companies given the current spread of the pandemic with grave concerns on public health.

He said the fact that several drug manufacturing countries planned or had already banned the export of drugs and medical supplies from their respective countries, Nigeria was left with no choice than to produce the drugs locally.

Mr. Emefiele said the CBN and the Bankers’ Committee resolved to collaborate with one coherent strategy to provide confidence to the customers, counterparties, the public and ultimately putting Nigeria first.

He said engagements would be held with banks, trade creditors, trading partners regarding existing letters of credit and trade commitments to facilitate the process.

The CBN governor assured that the industry was committed to resolving all existing financial commitments in a comprehensive and orderly way.

“We have resolved that profit would not be the primary motive at this time. Rather, preserving confidence, financial stability and support for the economy will be the overriding objectives,” he said.

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Considering the disruptions to global supply chains, the CBN governor said the Bankers’ Committee advised Nigerians and companies to prioritize their import needs and focus more on sourcing raw materials and input locally.

During the meeting, he said members discussed the significant health and economic crisis caused by the novel coronavirus, which has resulted in escalating worldwide infections, deaths, disruptions in global supply chains, travel restrictions and turmoil in the international financial markets.

He said the industry learnt from the lessons of the previous crises, including the 2008 global financial crisis and the oil price slump of 2016, in responding to the current crisis.

Noting the success of the CBN’s policy on the restriction of foreign exchange allocation for the importation of 43 items, the committee encouraged the Bank to strengthen the policy.

Also, members urged the CBN to consider other measures targeted at export promotion and/or import substitution to position Nigeria as a key global producer and build a self-sufficient economy.

On the financial system’s implementation and operationalization of the policy measures earlier announced by the CBN under the stimulus plan, the committee proposed other measures for better success.

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A fortnight ago, the CBN announced an additional one-year moratorium on its intervention facilities; interest rate reduction on intervention facilities from 9 per cent to 5 per cent

The Bank also announced the creation of a N50 billion targeted credit facility for affected households & Small and medium Enterprises as well as granting of regulatory forbearance to banks to restructure terms of facilities in affected sectors.

Other measures announced under the plan included the strengthening of the Loan-to-Deposit Ratio (LDR) policy, to encourage significant extra lending from banks.

The committee also urged improving foreign exchange supply to the CBN by directing all oil companies (international and domestic) and all related companies (oil service) to sell FX to CBN and no longer NNPC.

Other resolutions included the immediate activation of the N1.5 trillion lnfraCo Project for building critical infrastructure; release of additional N100 billion intervention in healthcare loans to pharmaceutical companies, healthcare practitioners intending to expand/build capacity.

Another N1 trillion in loans to boost local manufacturing and production across critical sectors.

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